The Prudential Regulation Authority has published a consultation paper proposing changes to the UK Financial Services Compensation Scheme deposit guarantee framework, including higher protection limits for deposits and temporary high balances, alongside consequential rule updates to enable implementation of the proposed Bank Resolution (Recapitalisation) Bill. For depositor protection, the PRA proposes increasing the standard deposit protection limit from £85,000 to £110,000 and raising the limit for certain temporary high balance claims from £1 million to £1.4 million, both applying from 1 December 2025 for firm failures occurring on or after that date. Firms would be required to update single customer view systems to reflect the new standard limit from 1 December 2025, and would have a six-month transitional period until 31 May 2026 to update disclosure materials, including revised depositor information to be displayed in third-party premises such as banking hubs. The consultation also proposes amendments to the PRA Rulebook’s Depositor Protection Part, supervisory statement SS18/15 and the Deposit Guarantee Scheme statement of policy, including removal of spent provisions and outdated references. On resolution, the PRA proposes new and amended rules to allow the FSCS to carry out new functions envisaged under the Bank Resolution (Recapitalisation) Bill, including making recapitalisation payments and levying firms to recoup those payments, with a new levy payer class excluding credit unions. Responses on the FSCS protection limit proposals are requested by 30 June 2025, while responses on the recapitalisation Bill implementation proposals are requested by 30 April 2025; the PRA expects to publish a policy statement on the protection limits in November 2025, and would finalise recapitalisation-related rule changes after the Bill receives royal assent and comes into force.

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